Strategic behavior in market-based redispatch: International experience

This study reviews international experience with market based redispatch. It focuses on two manifestations of strategic behavior: abuse of market power and so-called inc-dec gaming. Two central arguments are derived from the review. First, reviewed countries explain strategic behavior by the lack of competition within congestion regions and primarily as a result of market power. Inc-dec gaming, if present, is recognized as a problem only in combination with market power exercise. Second, strategic behavior can be effectively addressed with countermeasures. In result, the potential for strategic behavior within market based redispatch does not seem to justify rejecting its implementation. •Strategic behavior is explained by insufficient competition, i.e. by market power.•Strategic behavior without market power is possible but rare in practice.•Existing problems can be effectively addressed with countermeasures.•Strategic behavior potential does not justify use of administrative alternatives.